London mayor Sadiq Khan has reappointed Merrick Cockell as chair of the London Pension Fund Authority, with specific instruction to divest the pension fund from fossil fuels and help attract investment in London infrastructure and housing.
Sir Merrick, the former Conservative leader of Kensington & Chelsea RBC, was first appointed as chair of the £4.6bn pension fund in September last year. His chairmanship will now continue until the end of 2018.
Mr Khan said the appointment demonstrated his own willingness to “put aside party political differences in order to get the best possible deal for Londoners”.
Mr Khan pledged in his election manifesto to “take all possible steps to divest the LPFA of its remaining investments in fossil-fuel industries”, as part of a wider set of promises to improve London air quality and support renewable energy and energy efficiency. He has now tasked Sir Merrick with implementing “an approach that recognises the strong environmental and financial case” for divesting from fossil fuels.
Most Local Government Pension Scheme funds have at least some holdings within companies associated with fossil fuels, either as part of an active investment strategy or within a passive fund that invests in the top companies within an index such as the FTSE.
Within its top 20 pooled holdings, for example, the LPFA has invested around £33.1m in the Energy and Minerals Group Fund III, a fund that itself invests in companies involved in gas, oil and coal.
Mr Khan has also charged Sir Merrick with “encouraging investment in London’s infrastructure”, in line with another manifesto promise to “use City Hall as a platform to attract [investors] to finance homes for long-term, secure rent”.
Sir Merrick said in a statement: “I believe strongly that through collaboration, the local government pension sector can be a world leader in infrastructure investment, which is why I’m also looking forward to using the platform of the LPFA to help deliver the infrastructure and investment London needs.”
A spokesperson for the fund said the practical details of how the LPFA will deliver on its new commitments will be discussed by the LPFA’s board in the coming weeks.
The LPFA is already active in housing and infrastructure investment. In late 2014, the Greater London Authority chose the LPFA as a delivery partner to provide 85% of the funding needed for a 200-home property development in East London.
The LPFA jointly owns an investment vehicle with the Greater Manchester Pension Fund, through which they invest in infrastructure projects such as train fleets, wind farms and green energy production plants.